By Akram Sabbagh

It seems that no matter where you look, we are governed by wheels and cycles. Seemingly separate, but somehow connected.

Modern scientific theories espouse that our entire universe works to a cycle, and that “The Big Bang” itself was just one part of a cycle that may have occurred many times before and may happen again. The planets, our earth included, orbit in cycles around our sun. We are governed by the cycles of our planet as it revolves on its axis, creating night and day, seasons, years.

Business too is governed by cycles and wheels. Google “economic clock” and you will see a variety of explanations of the cycles of economic ups and downs that we react to, complain about, or bank on. Just like our Earth where multiple seasons can be experienced in different regions (northern winters and southern summers), so too the economic seasons can vary at the same time by industry sector, asset class, etc.

Within each business, cycles also play their part. The bigger wheel of business is defined by terms like “start-up”, “growth”, recycle to the “next level”, “divestment” and “decline.” All are seasons of a kind, and within these lie the smaller wheels and cogs of new ideas, products and services, staff, clients, shareholders, succession planning, etc. All ebbing and flowing to their respective tides, seasons and cycles.

Somehow, as business owners, leaders or managers, we must make sense of all of these interconnections. But first we need to be aware of the wheels at play and where we, our business and staff are placed within them.

It’s only when we know what stage of the cycle we are in can we consciously build and enact a strategy to build on – or get us out of where we are. In our business we’ve always used a variety of frameworks (like Stages) to help our clients determine where they sit in the cycle, and how this plays out for them in commercial, cultural, personal and relationship terms.

Because the reality is, no matter what stage, quadrant, season or cog in the wheel you may be in, it’s what you then DO with the knowledge that defines the outcome. Do you react to a situation on the cycle or respond to it? Take for instance the latest “down cycle” in oil prices.

One of our clients recently expressed his frustrations at senior management within the oil and gas giant he works for. As the oil price dropped, the reactive tendency was for the business to make most of the highly paid consultants redundant. Seems fine from an accounting perspective because you reduce significant costs. The issue was that the business had made a conscious decision some years before to only employ support staff as wage earners. So you have a business where the clerical and administrative staff are on payroll, and the specialists, engineers and “knowledge base” of the business reside with the consultants.

So, getting rid of all the highly paid consultants equated to all the knowledge walking out the door. A wise man once termed this strategy as “Clown Sizing.”

So reacting to the cyclical downturn, it seems that this business may have cut itself off from its future. Or at least impeded its ability to respond swiftly to the next “up” in the cycle.

How could they have done things differently? First and foremost, I doubt the decision makers ‘sat above’ the cycle to understand its implications. Maybe they would have responded (rather than reacted) to it in a different way. Responding means understanding the bigger picture, that there are systems within systems, and that one decision “over here” has an influence “over there.”

To put it in seasonal terms, responding to winter means understanding that it is a part of a cycle, so you prepare for it in summer by stocking up on fuel. Reacting to it means burning the house down to stay warm when the first frost hits.

So where are you and your business on the Wheel? Will you respond from understanding and knowledge, or react with a Big Bang?
Ak Sabbagh
Partner
AltusQ – bringing passion to strategy, & strategy to passion

0419 843 174
http://www.altusq.com.au/